Carlesa A. Washington

Get Taxes Out of the Way

Background: Washington is single with no children. She is a recent graduate of Howard University and works as a concierge, assisting new apartment residents with settling in. She lives in the District with her mother. Washington earns about $32,500 a year.

New Year's resolution: Pay off her debts and begin saving to buy a home.

Progress so far: With some tightening of her spending, she's paid off $1,247 owed to Bally's and $318.24 to Macy's. So far, she's saved about $300 in her emergency fund and $120 in her homeownership fund. She discovered that a delinquent Visa bill had ballooned to $6,000 with interest and fees. She called and got the company to stop charging interest and fees. She's been putting about $600 a month toward that debt, which is down to about $4,800.

"I just can't wait to be debt-free," she said.

Her challenge: Washington recently learned she owes the IRS about $1,400. A former employer did not withhold enough taxes from her pay as she had indicated when she filled out her W-4 form. She's getting refunds from Maryland ($498) and Virginia ($178). That means she has to come up with about $700.

The next step: I suggested she cut back on the extra payments on the Visa bill to save the money for the tax bill. She may need to make payment arrangements with the IRS.

She's still working on her budget and spent an unplanned $495 to be trained as a bartender. At least that training can help her pick up some extra income.

Washington wondered about taking a summer vacation with friends, but she had the right answer. Not until her debts are paid, she reassured me.